1) The Independent ReviewWinter Issue Now Available

We are delighted to announce the publication of the Winter 2011 issue of the Independent Institutes scholarly journal. Addressing subjects as diverse as public policy, intellectual history, economic theory and political philosophy, the new issue of The Independent Review answers the following questions:

How have federal subsidies to higher education transformed the mission and culture of academia?

Why do some countries that seem similar in virtually every other respect vary tremendously in their levels of economic development?

What accounts for the formation of political coalitions of idealists and opportunists who support the same regulations, but for vastly different reasons? Read the article.

How did the 55 mile-per-hour national speed limit drive the citizens band radio craze of the 1970s?

How did federal policies forged in the 1950s contribute to the stagnation of the nuclear power industry decades later? Read the article.

Why did Adam Smith infuse The Theory of Moral Sentiments with the language of music and harmony?

2) Cap-and-Trade Scheme Adds to Challenging Business Climate

On December 16, Californias Air Resources Board (CARB) approved a major step toward the full implementation of the states climate-change law. The law, known as AB 32 and signed by Gov. Schwarzenegger in 2006, authorizes the agency to reduce greenhouse-gas emissions to 1990 levels by 2020, by capping the total amount of permissible emissions at 600 industrial plants and creating a secondary market in emission permits.

Although the approved cap-and-trade scheme has already led some businesses in targeted industries to leave California (a state with a 12.4 percent unemployment rate, among the highest in the nation), other businesses will stand to benefit from the program, at least in the short-term, argues atmospheric scientist S. Fred Singer, a research fellow at the Independent Institute.

In order to protect California businesses from out-of-state competition, CARB will (initially) allocate emissions credits (aka energy-rationing coupons) for free, Singer writes. The European Union Emissions Trading Scheme is the only precedent for free allocation of carbon credits; it resulted in windfall profits for politically connected industries and higher electricity prices for consumers.

3) Pakistan and the Law of Unintended Consequences

A new documentary film sheds light on the turbulent political culture of Pakistan. Directed by Duane Baughman and Johnny OHara, Bhutto focuses on the life and times of Benazir Bhutto, the former prime minister who was assassinated after her return from exile in December 2007. The film aims to explain Bhuttos significance in a country grappling with the aftermath of political violence, but its most important contribution is its coverage of the rise of Islamic fundamentalism, according to Independent Institute Senior Fellow Alvaro Vargas Llosa. That aspect of the film offers a lesson in the unintended consequences of social engineering.

After Bhuttos father, Zulfiqar Ali Bhutto, became Pakistans first civilian president in 1971, he encouraged the spread of Islam as a way to strengthen nationalism and limit the influence of the United States, a supporter of archrival India. His successor and opponent General Mohammed Zia ul-Haq further promoted Islam for the sake of nationalist prideand to counter the growth of Benazir Bhuttos democratic party. (U.S. support for Zia, who supported the Afghan mujahedeen in their campaign to oust the Soviets, also contributed to the spread Islamic fundamentalism in Pakistan.) With the Islamization of Pakistans military, neither Zias protégéNawaz Sharifnor Benazir Bhutto could fully establish civilian rule in their country.

Benazir Bhutto had many flaws, Vargas Llosa writes. But she was right about the most important thing: Pakistans original sinthe reason for its instability, its dysfunctional politics, and the penetration of its state and society by religious fanaticismwas the brutal influence of military rule in that republics short life. And still is.

4) Eland Calls for Positive Engagement with Iran

White House arms control coordinator Gary Samore calls for new sanctions to be imposed on Iran. But according to Ivan Eland, director of the Independent Institutes Center on Peace & Liberty, sanctions almost never prevent the targeted government from taking actions deemed crucial to its security. Thus, Western governments eager for cooperation from Tehran on Irans nuclear program should engage it using positive inducements, rather than sanctions or threats likely to provoke stiffer resistance.

Fortunately, a policy of more constructive engagement may be in the works. Some reports indicate that the United States is prepared to formally recognize Irans right to uranium enrichment in exchange for Irans turning over 3,000 kilograms of low-enriched uranium to Russia. This would be a step in the right direction, according to Eland.

Even such positive incentives may not work to persuade an Iran fearful of Israeli, Arab, or U.S. attack to give up working on the ultimate deterrent to such threats, but its worth a try and has a greater chance of working than punitive pressure, Eland concludes.

5) Double Your Impact!Plus, New Blog Posts

Thanks to a generous donor who has offered to match every donation made in response to the Independent Institutes year-end online donation drive, all such donations received between now and the end of the month will be doubled! Your support allows the Institute to do what it does bestproduce research, publications, events, and media programs that further the ideas of liberty! Dont pass up the opportunity to have the impact of your contribution doubled while every dollar counts towards our challenge match. To give a year-end gift, please click here.